The Moretown Landfill is seen from the air, looking south. The Winooski River and Interstate 89 are on the left.

MORETOWN — A privately-run landfill is sounding alarms about how unapproved permits could slash into a major Moretown revenue stream and how four-fifths of its customers, which includes municipalities across the state, soon wouldn’t be able to drop off trash.

The Moretown landfill could reach its permitted capacity in February, and the company that manages the business has warned it must reduce intake by up to 80 percent starting Dec. 1 to postpone that outcome, the landfill’s general manager, Tom Badowski, said.

According to a Nov. 2 letter he sent to the Select Board, the change could cost the town roughly $400,000 a year, which officials say could also adversely affect a significant portion of the trash business across the state.

The landfill is one of two in the state that still accepts municipal waste, and haulers transport waste to the site from as far away as Chittenden County and Brattleboro. About 50 or 60 percent of incoming waste comes from municipalities, Badowski said.

The other landfill that accepts municipal waste is operated by Casella Waste Systems in the Northeast Kingdom town of Coventry, near the Canadian border.

The Moretown landfill currently has three cells, or areas, for dumping waste, and the landfill is seeking to create a fourth cell, which would last about 15 to 18 years and be about the size of the previously three combined, Badowski said.

The town’s Development Review Board is currently reviewing an application for Cell 4. But even with local approval, the state has suggested the company’s operating permit may not be renewed unless odor complaints are resolved.

The suggested 80 percent intake reduction could extend the life of the existing landfill by eight or 10 months, Badowski said. Customers have been put on alert, but they have not been given notice that they will be banned or that a contract won’t be renewed, he said.

He said the company plans to choose what customers to still do business with based on contracts and relationships.

Martin, whose grandfather was also a Select Board member and whose mother was a town clerk and treasurer, said Moretown wants the landfill to obtain the permits but that standards shouldn’t be lessened to make that happen.

Martin started working on the new town budget earlier this month, and he has already asked town departments to chop their own budgets by 20 percent to 25 percent. He said he doesn’t know how the town could cut the money it would need to make up for the revenue loss projected. Martin suggested some roads might not have new gravel for the next two years.

Moretown Vice Chairman Clark Amadon told VtDigger.org that taxes for a $250,000 home could increase by $500 or $550 if the landfill stops offsetting town taxes.

Last year, the town’s $1.1 million budget was helped with $532,762 through a host town agreement, which directs revenue from the landfill to the town.

Through its annual host town agreement revenue, the town has used a little more than half directly for its operating budget in recent years. For the last 12 years, it’s built up more than $1 million in savings, which are in savings and capital funds, Martin said.

The town also has a provision in the agreement that gives the municipality a fixed amount of crushed stone each year, officials said. That amounted to about $80,000 for a recent year, Martin said.

As the landfill nears its permitted capacity, the town is already seeing signs of the change affecting the municipality. Taxes for the property will drop from $208,647 in 2011 to $87,090 for this year.

In regards to the proposed expansion, neighbors have packed DRB meetings, and a hearing on odor concerns will continue at 6:30 p.m. Tuesday at the Town Hall, located at 994 Route 100B Moretown.

Martin said the DRB, whose permitting authority isn’t subject to the Select Board, could continue with several more hearings.

To get more time, Martin said he’d like the state to allow the landfill to re-open Cell 2, which Badowski said would extend the landfill for about six or seven months. That extension would not have restrictions on the amount of refuse accepted, he said. Staff with the Agency of Natural Resource’s solid waste program are reviewing that option next week, said George Desch, director of the state’s Waste Management and Prevention Division.

Cell 2 could be re-opened because of settling, which has reduced some areas by some 20 to 30 feet, Badowski said. The landfill has requested to take off a cap and refill parts of the cell, he said.

The town has switched from five-year host agreements to one-year host agreements, and Martin said those could be used to create requirements for the company.

Martin said he’s cautiously optimistic about moving forward, but he’s planning for the worst in his town budget.

“I had a farmer the other day say ‘This just makes me sick,’” Martin said. “We can’t afford an increase like that.”